Blanket Fees

Via BoingBoing, here’s a great interview with Jim Griffin, the guy who was once the head of Geffen’s technology department. He points out that we have a long history with dealing with entertainment by applying a blanket fee and divvying up the pot:

One disconnect the iTunes model has with reality is that what works for IP is a bundled price, and what doesn’t work is granularity, historically. Do you think Edgar Allan Poe could have made money if he sold The Raven separately from 30 other poems?

Newspapers have always known that if they sold the sports section separately, they could finance the rest of the paper. We know when we get cable TV that we have to buy the channels we don’t want to get the ones we do. Not many cellphones are sold now without a bundled price. We’ve seen that transition in ways. For intellectual property we almost always thrive better with bundles.

99 cents is both too high a price and too low. It’s too low to pay for the burden of a developing artist, and it’s too high to fill an iPod. What the sweet spot is, is the recognition of the low or non-existent cost of delivering digits.

But even more that that, I would point to the positive economic consequence of using art. There are negative consequences. Let me give you an example. If there’s a band called ‘Andrew and the All-Stars’ and you go out to a concert and buy a CD, then that’s a $10 to $20 tax on your adventurousness. But if you pay the flat fee for your content then listening to ‘Andrew and the All-Stars’ is a positive decision. You’re getting more for the money you’ve already paid.

Now consider there’s a pool of compensation money for music. The new incentive is the same as the old one, to get people to listen to it. The more it moves the more money I get. That’s how radio works. Artists get paid more the more people listen.

We in the arts business are in the position of a librarian that quiets 14 year olds by pointing a finger at them and shushing them. But we aren’t very good at sushing them, it?s not what we do well; we haven’t done well hiring those people.

That’s a fascinating notion. By paying your blanket fee, you have access to all the downloads you want. Based on how many times an artist is downloaded, that determines how much of the common pool is paid out to them. The incentive is to increase the downloads, not quash them because that means the artist and labels make more money. Downloading becomes a parallel technology to radio, like “radio on demand”. The attention economy is then what drives where the money goes, monetizing what already kind of exists. If you have something that generates buzz and people recommend to each other, that artist makes more cash. I think the number I’ve seen on P2P use is something like 100 million worldwide. Suppose those users were paying something like $10/month for access to all this, the pool would be bringing in $1 billion dollars per month, currently more money than the music sales business makes worldwide. They do this without having to print and ship CDs or albums, so everyone makes more money other than the bricks and mortars sellers, who are forced into a niche market (it might be a pretty big niche, considering that 100 million users worldwide still means at least 200 million Americans not in the plan and 6 billion people worldwide outside of it) . Interestingly, this bears a certain resemblance to Cringely’s plan for a “Snapster” that I blogged 6 months ago, although in his case it was a public company with wide distribution of shareholders filling the same role as the centralized pool.

I’m unfamiliar with the current “all you can eat” download services. I’m pretty sure some exist. What ones are out there, and how close are they to this model? Is the new “Napster” one of these?